Following the first countermeasures taken on February 28, 2022,
Russia adopts new measures in response to the sanctions issued against it by the EU, the US and other Western countries in connection with the Ukrainian conflict.
On March 1st, 2022, the Presidential Decree No. 81 containing “New Special Temporary Economic Measures to Ensure the Financial Stability of the Russian Federation” was published.
The new package of countermeasures imposes further limits on transfers of foreign currency outside the Russian Federation and introduces new restrictions on cross-border business relations between Russian and foreign subjects, providing for a special pre-approval procedure for certain financial and investment transactions, including real estate transactions, with subjects related to so-called “Non-Friendly” Western countries, which transactions may now be carried out only after obtaining a special permit from the Government Commission on the Control of Foreign Investments of the Russian Federation (the “Government Commission“).
In particular, the Decree provides for the following:
(I) With respect to the transfer abroad of foreign currency,
as of March 2nd, 2022, the transfer abroad of foreign currency or other monetary instruments in foreign currency for amounts exceeding the value of USD 10,000 (to be calculated at the official exchange rate of the Central Bank of the Russian Federation on the date of transfer) is prohibited;
(II) With reference to financial and real estate transactions and investments¹,
as of March 2nd, 2022, Russian residents shall be able to engage in the following transactions with foreign subjects that belong to or are connected with Non-Friendly Countries (i.e. those that have citizenship, place of registration or principal place of business or income in one of these Countries or are controlled by a subject that falls into these categories) only upon obtaining a special permit from the Government Commission or the Central Bank (as applicable):
- transactions involving the provision of loans or financing (in Rubles) in favor of the above mentioned foreign entities;
- transactions involving ownership of securities² or real estate; Please note that transactions of the same nature concluded with foreign parties not included in the so-called Non-Friendly Countries list but which have obtained such securities or assets from a party included in this category after February 22nd, 2022 will also be subject to the same limits.
¹These procedural limitations do not apply to transactions conducted by the Central Bank or other Public Authorities of the Russian Federation.
²”Securities” are intended as shares or other financial securities, which do not include interests held in limited liability companies incorporated under Russian law. In this sense, the Russian Federal Chamber of Notaries has confirmed that Russian Notaries will be able to proceed with the formalization of transactions involving interests in limited liability companies without the need to obtain a permit from the Government Commission. However, we would like to point out that it is possible that such transactions will also be restricted in the future.
Viorica Efros
Junior Partner
Head of the East European Desk
E: viorica.efros@l2bpartners.com
